What people want, and in what form they want it. In other words, where the future markets for digital products are. A new study by David Y. Choi of Loyola Marymount University and Arturo Perez of the business development service Growthink (at http://tinyurl.com/nr8eb) says that “online piracy has shown to be a valuable source of innovation to both industry incumbents and entrepreneurs”, pointing out that pirates “tend to be early adopters” of music, game of software, and have notably “made a significant impact in the evolution of file-transferring technology” and pointing out, for example, that “many of former [illicit] Napster users have migrated to the legal version of Napster and Apple’s iTunes”.
The authors note that the first incarnation of Napster, before it folded under lawsuits from record labels, demonstrated that plenty of people were interested in online distribution and storage of music to make customised CDs, find out-of-print songs and bootleg recordings at a time when record labels were still wondering how to sell music online.
That’s an understatement. Napster had anywhere between 29m and 60m users at its peak, in February 2001 (15 months after the first record industry lawsuit was filed against it). Napster’s power also turned out to be in finding unreleased songs – and later generations of file-sharing networks have benefited artists who might otherwise have languished on the club circuit. Just ask the Arctic Monkeys, whose fanbase was greatly enhanced by having CDs of their gigs and songs put online before they had a record contract.
By contrast, last September Apple’s chief executive, Steve Jobs, mentioned that the iTunes Music Store – by far the largest music download retailer – had “just crossed 10 million accounts”. That was at roughly the same age after its launch as Napster, which did not have the same benefits of the broadband age.
